Question

Can you please work out and show the solutions for E15.15 and E15.16:

E15.12 (LO4) Gilliland Airlines is considering two alternatives for the financing of a purchase of a fleet of airplanes. These two alternatives are: Compare two alternatives of stock vs. issuance of bonds 1. Issue 90,000 shares of common stock at S30 per share. (Cash dividends have not been paid nor is the payment of any contemplated.) 2, Issue 10%, 10-year bonds at face value for S2,700.000. It is estimated that the company will earn $800,000 before interest and taxes as a result of this purchase. The company has an estimated tax rate of 30% and has 120,000 shares of common stock outstanding prior to the new financing. . El 5.15 (LO 5) Adcock Company issued S600.000. 9%, 20-year bonds on January 1, 2020, at 103. Inter- Prepare entres foreconfissaance of est is payable annually on January 1. Adcock uses straight-line amortization for bond premium or discount bods, payment of interest, mortiza- tion of premium, and redemption at maturny Prepare the journal entries to record the following. a. The issuance of the bonds. b. The accrual of interest and the premium amortization on December 31, 2020 c. The payment d. The redemption of the bonds at maturity, assuming interest for the last interest period has been paid of interest on January 1, 2021 and recorded. .E15.16 (LO 5) Gridley Company issued S800.000. I 1%, 10-year bonds on December 31, 2019, for Prepare entriestorecord issuance of $730,000. Interest is payable annually on December 31. Gridley Company uses the straight-line method to amortize bond premium ods, payment of interest, amortia tion of discount, and redemption at maturny or discount. Prepare the journal entries to record the following. a. The issuance of the bonds. b. The payment of interest and the discount amortization on December 31, 2020. c. The redemption of the bonds at maturity, assuming interest for the last interest period has been paid and recorded.

Answer 1